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This story takes place in the near future. Another world, named the Digital World, has begun to spread within computer networks. Not only that, Digital Monsters call this world their home. Their existence has been kept secret from the general public by DATS, a unit made specially to investigate the Digital World. However, rumors of monsters being born from computers, and the humans who fought alongside them, began to spread among the children...

Using a battle system reminiscent of Digimon World 2, Digimon Story allows the player to use up to three digimon at a time in a turn-based battle, and up to six can be brought with them at any given time. Digimon gain experience points and level up, gaining new techniques and evolution options. However, to become even stronger, digimon can be jogressed together, or degenerated to a lower form in order to gain stat bonuses on leveling up once more.

On the overworld map, most enemy encounters are random, with various NPCs and boss characters having visible overworld sprites. In battle there are six panels that can be occupied, with some techniques affecting several panels at once. There are many boss battles where a single opponent will take up more than one panel on the battlefield.

One major component is the Player's Farm, where they can raise and care for their digimon with the additions of a variety of items which can be purchased. New digimon can be acquired a variety of ways, mostly commonly by generating a digitama with data earned from previously defeated opponents. Digimon can also be created by matching two parents to generate a digitama. Sometimes, a special event occurs where the player is given data of specific Digimon to generate a new egg after certain story requirements are fulfilled.